How to Attend a Foreclosure Auction

The foreclosure market has always been attractive to real estate investors or those who cannot afford the high prices of homes and condos. The properties are offered to the public through auctions. Auctions are sometimes held for one property, but are more often held for multiple properties during a day or weekend event.

Difficulty: Moderate

Instructions

1. Find upcoming foreclosure auctions in your area through a website like USHomeAuction.com, which also allows you to set up email alerts whenever an auction is scheduled to occur in your specified location (see Resources below)

2. Obtain a "bidder's package" before you attend the auction. This packet of information will give you the particulars on the properties that will be offered, including a title report, a description of the property, a survey and financial information.

3. Inspect the properties that interest you in advance. You should take along a professional inspector who can let you know about any problems that may arise and give you an estimate for repairs, since many properties are sold "as is" and there are no exchanges or refunds.

4. Find out whether the foreclosure properties you are interested in have clear titles. You can usually find this information by accessing the property's title information at your county courthouse. Remember that you will likely be responsible for any outstanding liens once you purchase a property.

5. Gather the materials required to attend the auction. For example, for auctions listed on the USHomeAuction website, you must bring a picture ID, a cashier's check made out to yourself for the amount of $5,000 (this is put toward the required 5 percent deposit on any property for which you are the winning bidder) and a personal check or cash with which to pay the balance of the deposit. Note that you must also register at the website before attending the auction (registration is free).

6. Check in once you arrive at the auction. For auctions listed on the USHomeAuction website, you will need to show your cashier's check, ID and other means of payment. You will then be assigned a bidding number and bidding card. Auction employees will be available to answer questions of first-time bidders and guide you though the bidding process.

7. Enter the auction hall and try to find a place that's close to the auctioneer yet still gives you a good view of the other people in the audience. You want to be able to see who else is bidding on your property. Pay close attention to the auctioneer, as he'll probably be speaking very quickly. In most cases, large photos of the homes will be projected on a screen or placed on an easel as they come up, so everyone knows what's currently on the auction block.

8. Bid on a home by raising your card when the auctioneer calls out a price figure. Keep raising your card until you are no longer willing to pay the price being called. If you're the winning bidder, the auctioneer will bang the gavel and announce, "Sold!" followed by your bidder number.

9. Sign the confirmation document presented to you after the auction to verify that you have placed the winning bid. You will be shown to a closing agent, who will take your deposit on the home. Most foreclosure auctions will have on-site lenders available to assist you with financing.

Tips & Warnings

• Attend an auction prior to the actual one in which you will participate. This will allow you to become accustomed to the bidding process without the pressure of actually being involved in it.
• It's best to bid on foreclosure properties that are not occupied. It is often difficult to get former owners or tenants out of a property without expensive and time-consuming legal proceedings.
• Work with a real estate agent or lawyer who is knowledgeable about the auction process. You'll want to review the information contained in the "bidder's package" for the properties you are interested in before you attend the auction.
• Most foreclosure auctions charge a 5 percent "buyer's premium" on top of the home's sale price. Be sure to keep this in mind as you bid.
• Keep in mind that in some states, the original property owners have a limited period of time when they can reclaim their property, even after it has been auctioned. This is called a "right of redemption," and although the time period varies from state to state, it is usually somewhere between 60 and 90 days.

Resources

• USHomeAuction.com for auction schedules